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Wednesday, May 9, 2018

Recent Buy: General Mills Inc. (GIS)

I was able to make a purchase right away in May, but I fear I may be able to make only one or two more purchases over the next couple of months. I have a very large and important purchase coming up for my girlfriend of four years. I'm sure you can guess what it is... I haven't really been saving up for this and need to start. I will use about half of my savings and then the rest will be put on a credit card that will have about 6 months left of 0% APR. 




One could argue that I should have been saving up for this earlier, but that would have meant missing out on many great buying opportunities. To be fair I've been trying to build up my checking account base value for quite some time now, but with the market being down for four months it has been hard to not invest.  One could also argue that I could sell some stock to pay for this, but I'd rather just not invest for a few months instead. I will still be contributing to my Roth 401k and my Acorns account. With my employer match this will still be around $800 a month into my 401k and about $100 a month into my Acorns account. 

With that being said, on May 3rd I was able to purchase 25 shares of General Mills Inc. (GIS) for $41.07 a share. This purchase adds $49 of yearly dividend income to my portfolio!

General Mills is an American multinational manufacturer and marketer of branded consumer foods. Its brand portfolio includes more than 89 other leading U.S. brands. Their products can be found in just about any grocery store you walk into. 

General Mills has really struggled lately as the shift towards healthier and more organic foods sweeps the country. However they already have many healthy and organic products already and will continue to shift in that direction if the market dictates so. They also recently purchased Blue Buffalo which is a natural and healthy dog food. Again, the pet industry is a large and growing industry which will allow General Mills to capitalize on their purchase of Blue Buffalo.

I feel that they are undervalued as they have been one of the worst stock performers over the past few years. 

Some quick facts about General Mills:
  • EPS of 2.877
  • P/E of 14.70
  • Dividend Yield of 4.63%
  • EPS growth as follows
    • 1 year - 6.7%
    • 3 year - (-0.6%)
    • 5 year - 3.3%
  • Dividend growth rate as follows
    • 3 year - 7.4%
    • 5 year - 9.5%
    • 10 year - 10.3%
  • Dividend Payout Ratio at 68%
Now the EPS growth hasn't been stellar, but this is a food company that has staying power.  There has been trends of eating healthier and going organic, but I believe General Mills will be able to shift in that direction as they already have many products that are healthy and organic. There has also been trends of eating out more, but eating out is way more costly than buying foods at the store and I don't think that is a lasting trend. People will figure out that advantages of preparing and cooking food at home. You also can't have a family and eat out every meal. 

The yield at these levels was too good to pass up and I'm willing to buy more if it continues to drop. 

This might be my last purchase until July or August, but I hope to free up some cash in the next couple of months. 

Let me know what you guys think! 

3 comments:

  1. Hi, I also picked up some more GIS. I have high hopes for the diversification into pet food. Have you any thoughts about that? Sorry my blogg is in Swedish only but you’ll see the majority of my holdings. Regards, T. Http://toscananext.blogspot.se

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    1. I think the diversification into pet food is a great move. The pet industry is huge and is growing at a very good rate. Millennials in America are getting married later and many are getting pets before kids. I live near Washington DC and the amount of dogs in my apartment community is incredible. Blue Buffalo is a healthy, natural dog food which is what people are looking for. Dogs are part of the family and many people are spending more and more on their pets.

      Thanks for stopping by! I'll check out your blog!

      Best of luck on the GIS buy!

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